Postal Service pushes electronic data project for Internet commerce

Would you buy postage stamps over the Internet? It seems incongruous, but the Postal Service's Information-Based Indicia (IBI) program will test that scenario.

One of the first commercial partners to produce and test a product for IBI is E-Stamp Corp. of Palo Alto, Calif. E-Stamp's system lets businesses replace a postage meter with a PC.

Customers buy a block of postage, then print the stamps electronically with laser printers. Each stamp has a two-dimensional bar code that provides a unique, scannable signature. The code includes postage amount, source and destination ZIP codes, and date and time of electronic printing. That's more information than you find on meter marks made by postage meters.

Local post offices will have to install scanners that read the stamps and record information. That should speed the mail along and help keep customers honest.

This electronic data interchange project could help the government integrate Internet commerce in a big way. If it works, the application could easily expand into other areas.

Indicia stamps already have important logistics applications. The missing piece has always been an online payment plan. The Postal Service fills that void by making the financial transaction the foundation of the system.

In a few years, IBI might track mail through many checkpoints, as Federal Express tracks its packages. A tracking option is available now only for USPS' Express Mail packages. To check the option status online, visit the World Wide Web site at http://www.usps.gov/cttgate/.

What's not clear to me is how the Postal Service will deal with the added demands on its resources. A new information infrastructure is essential.

Customers must buy a 32-bit Microsoft Windows application developed by E-Stamp. They also receive a chip that plugs into a PC's parallel port. The software interfaces with a Windows NT commerce server operated by E-Stamp.

When customers buy postage over the Internet, the client chip encrypts the transaction via an algorithm licensed from RSA Data Security Inc. of Redwood City, Calif. The Postal Service will receive a portion of the profits.

This method will be attractive to offices, because it lets them integrate everything into their client PCs. Users compose documents, select addresses, read mailing weights--if they have postage scales plugged in--and then print stamps.

E-Stamp is working on an envelope with a transparent window to show the stamp printed right on the document, further streamlining the process. The plan's details for PC postage meters appear at http://www.usps.gov/fr_search.html.

Beta testing will start by year's end within six ZIP codes near Washington and San Francisco, said E-Stamp marketing vice president Nicole Eagan. The test is limited because an average post office isn't equipped to handle electronic stamps.

Nina McGarry, communications coordinator for the Postal Service's indicia program, said USPS will work closely with the vendor to select beta test participants and monitor the results.

E-Stamp spokesman Milton Howard said participating post offices will initially scan a sampling of the stamps to spot-check accuracy. Eventually a computer infrastructure would be necessary to keep track of scanned stamps at multiple locations.

Instead of canceling machines, the Postal Service would need computers that could track millions of letters and packages, rejecting any with fraudulent electronic stamps.

Would a scanning computer in Philadelphia know it was looking at a duplicate of a stamp already used in Baltimore? With fast processors and a good network, it could happen. USPS intends to move away from postage meters toward IBI, so we're sure to see more Internet-based postal products.

Big players in the computer world already seem impressed. In September, Microsoft Corp. and AT&T Corp. each acquired a 10 percent equity in E-Stamp.